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If the US can produce clean steel, China should too

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China is now the world's leading industrial producer of carbon dioxide. It is also, as a new report by the Alliance for American Manufacturing (AAM) makes clear, riddled with terrible environmental pollution throughout its steel industry (www.americanmanufacturing.org/assessment-of-china). Despite worsening air and water conditions throughout much of the nation, Beijing has shown a repeated lack of will to impose reasonable emission regulations on provincial and local governments. The bottom line is this looking at current discussions on global climate change, there's little to suggest that Beijing will address the issue in any effective manner.

Recently, the U.S. House Ways and Means Committee held hearings on climate issues, and China was a key subject. China possesses the world's fastest-growing steel industry, but this rapid growth has brought with it ineffective enforcement of weak pollution-control standards, a failure to use adequate pollution-prevention measures and such high levels of pollution that the World Bank now estimates 99 percent of the 540 million Chinese who live in urban areas are breathing unsafe air.

At U.S. Steel, we argue that a real climate change solution cannot be achieved unless the White House and Congress hold China accountable for its reckless environmental practices.

United Steelworkers union president Leo Gerard cited the AAM report during recent congressional hearings, and at U.S. Steel we agree that any carbon discussion must adequately recognize the serious flaws in China's emission controls and the damage it is doing to human health and global efforts to address climate change.

We consider AAM's research to be extensive and sound. It was conducted with help from a team of environmental and legal experts, including investigators working in China. The report, An Assessment of Environmental Regulation in the Steel Industry in China, suggests that China's steel industry is not only harming the health of its own people, but spreading pollution around the world and contributing to global warming.

Paradoxically, China benefits economically from its failure to control pollution, giving it a significant advantage over its foreign competitors. Specifically, because China has low environmental standards and lax enforcement, U.S. mills in recent years have had to spend 80 percent more than their Chinese counterparts per ton of steel produced to control air and water pollution. Estimates suggest that Chinese steelmakers would have to triple or quadruple their capital expenditures on pollution control equipment to reduce emissions to U.S. levels.

China's production of steel has quadrupled this decade, making it by far the world's largest source of steel. It now produces more than the United States, Russia and Japan combined. And while China produces one-third of the world's steel, it is responsible for half of the world's carbon dioxide from steelmaking, making it the leading contributor to global warming. U.S. steel producers are far more efficient, producing 1.2 tons of carbon dioxide per ton of steel produced compared with an official estimate of 2.5 tons in China (which actually may be as high as 4 tons according to unofficial estimates).

Propelled by rapid expansion and low environmental standards, China also has become one of the world's biggest polluters, producing more sulfur dioxide than any other country.

Although both the Chinese government and leading companies in the steel industry claim they want to address the country's environmental problems, the levels of pollution are still three to 20 times higher per ton of steel produced in China than in the U.S., depending on the specific pollutant and industrial process analyzed.

American jobs also are at stake due to the inequities of environmental standards for Chinese steel production. Perhaps the most glaring example of the huge gap between environmental protection in China and the United States is the resources and personnel devoted to regulation and enforcement. China's Ministry of Environmental Protection (MEP) has only about 300 employees compared with 18,000 who work for its U.S. counterpart, the Environmental Protection Agency (EPA).

With few employees, most of whom are confined to Beijing, MEP relies on provincial and local governments to implement generally vague environmental laws. But these local entities often give higher priority to economic growth and employment.

Even if China's environmental infrastructure were sound, its air and water pollution standards applicable to the steel industry are far less stringent than in the United States. For existing equipment in integrated steel mills, emission-control standards for particulate matter, for example, are from two to six times more stringent in the United States, depending on the steelmaking process. Chinese limits on sulfur dioxide are so low that most companies do not need additional pollution-control equipment to meet them.

The AAM report found that "the Chinese steel industry operates in an environment in which enforcement of existing standards is weak, the permit system is ineffective and facilities do not do an adequate job of monitoring their emissions and discharges. Financial penalties for violations are too low to have a substantial deterrent effect." For example, the maximum fine for non-compliance in China is $14,000 for most violations, and repeated violations don't necessarily lead to additional penalties. In contrast, American companies may incur penalties of as much as $32,500 per day.

Other factors contributing to Chinese steel industry pollution include higher use of energy (20 percent more energy consumed per ton of steel produced than the international average), a heavy reliance on coal to produce that energy, a large number of smaller steel companies and low use of recycled steel.

It's also misleading to compare Chinese steel industry practices to those in the U.S. decades ago, before regulations and pollution-control technologies existed. China simply can't claim a similar lack of expertise because the necessary environmental technology is already in widespread use today, and it has made the human and environmental impacts of industrial pollution both quantifiable and controllable.

Simply put, China now has access to the know-how needed to effectively address the industry's environmental problems. And if Beijing doesn't take steps to bring emission levels closer to those in the rest of the world, China's trading partners can justifiably complain that this failure to act confers on its domestic steelmaking industry an unfair competitive advantage.

Unless the damage caused by China's poor emission standards is addressed, the debate on climate change and global trade will get sidetracked and deadlocked. Every day, American steelmakers comply with air and water pollution standards that are six times tighter than China's and spend at least twice as much to operate and maintain pollution control equipment. It's important for policymakers to recognize that if the U.S. can produce clean steel, China should as well. That's why, as Congress begins to tackle climate legislation and such suggested routes as a cap-and-trade program and tax-based adjustments, China's products must face the same treatment. Otherwise, American steelmakers will face diminishing sales while dirtier production ramps up in China. Simultaneously, the climate problem will only grow worse. That's not much of a solution at all.

Terrence D. Straub is senior vice president of U.S. Steel Corp.

Metals Forum appears monthly and is open to submissions addressing issues of concern to the metals community.

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